1. Chapter 15: Employees, Payroll, and Account Reconciliation McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Employees, Payroll, and Account Reconciliation Employees and employers are required to pay local, state, and federal payroll taxes. Employers must withhold taxes from each employee’s paycheck. The amount withheld for federal taxes is determined from tax tables published by the IRS. The amount withheld depends on the employee’s earnings and the number of exemptions or withholding allowances claimed by the employee. FICA taxes and Medicare taxes are also deducted from employee’s paychecks. It is the purpose of Chapter 15 to show you how to use Peachtree to enter payroll default information, add employees, make journal entries for payroll, print payroll reports, and complete account reconciliation. 15-2

3. Peachtree Tips Peachtree Tips The exercises in Part 3 are cumulative. Exercises 12-1 through 14- 2 must be completed before starting Exercise 15-1. The Payroll Entry window is the Payroll Journal. In order for payroll taxes to be computed automatically, students need to copy the TAXABLE.DAT file (pages 592-594), check that the user-maintained payroll tables are included for Georgia (pages 594-596); establish the payroll account (page 596); use the Payroll Setup Wizard (pages 597-601); enter employee and employer default information (pages 602-604); and then complete payroll setup (pages 604-608). If you do not want to copy the TAXABLE.DAT file, payroll taxes can be entered manually on the Payroll Entry window. Refer to textbook pages 614 and 617 for completed payroll taxes. The Taxes – Benefits – Liabilities table lists the amount for both employee and employer withholdings. The Payroll Journal on pages 619-621 also shows withholding amounts. 15-3

4. Backing Up Chapter 15 Backup (.ptb extension) Excel (.xlsx) KilobytesPageNos. Chapter 15 Begin.ptb 1,514 KB 611-612 Chapter 15.ptb 1,542 KB 634 Chapter 15_PayJ_GLTB_BS_IS_SCF.xlsx 34 KB 634 Exercise 15-1.ptb 1,414 KB 641 Exercise 15-2.ptb 1,450 KB 644 Exercise 15-2_EL_CL_VL_IVR_PayJ_ GLTB_BS_IS_SCF.xlsx 46 KB 645 This information is also shown on textbook page 433. 15-4

5. Account Reconciliation, pp. 621-622 Read page 621. Peachtree’s general ledger is integrated with other parts of the program. The Southern Bank bank statement is on pp 622-623. Payroll Checking Account bank statement is on p. 623. Printing Reports: Account Reconciliation, General Ledgers, Customer Ledgers, Vendor Ledgers, and Inventory reports are on pp. 623-629. General Ledger Account No. 10200 Southern Bank (Cash account) Account No. 20000 Accounts Payable (Current Liability) JJH06 James Jarvis Hardware (Vendor Ledger)15-5

6. Glossary of Terms Chapter 15

7. Exemptions, p. 587 These are withholding allowances claimed by the employee. The number of exemptions or withholding allowances usually includes one for the employee, one for the employee’s spouse, and one for each dependent. 15-7

8. Withholding allowances, p. 587 Exemptions claimed by the employee. The number of exemptions or withholding allowances usually includes one for the employee, one for the employee’s spouse, and one for each dependent. 15-8

9. FICA taxes, p. 587 This deduction from wages is also called the social security tax and provides qualified workers who retire at age 62 or older with monthly payments from the federal government. A portion of this tax is for Medicare. 15-9

10. Medicare, p. 588 A portion of FICA taxes (also called social security taxes) deducted from wages of qualified workers. Medical benefits called Medicare are received by retirees after reaching age 65. 15-10

11. W-2 forms, p. 588 An annual report of an employee’s wages subject to FICA and federal income tax that shows the amounts of these taxes that were withheld. 15-11

12. Internet Activity, p. 635 1 Go to the book’s website at www.mhhe.com/yacht2011. www.mhhe.com/yacht2011 2 Link to Student Edition. 3 In the Choose a Chapter field, select Chapter 15. Observe that the Quizzes and More Resources list includes additional activities. In the Course-wide Content list, link Internet Activities; then link to Part 3 Internet Activities for Chapter 12-15. Select Open or Save. 4 Complete the SALARY WIZARD-Chapter 15 exercise. Read steps 1-5. 5 Follow the steps shown on the book’s website to complete this Internet activity. 6 Using a word processing program, write a brief summary of what you find. Include all appropriate website addresses. 15-12

13. Going to the Net, pp. 635-636 Access the Employer Reporting and Instructions website at http://www.ssa.gov/employer/. Link to General W-2 Filing Information, then answer these questions. Access the Employer Reporting and Instructions website at http://www.ssa.gov/employer/. Link to General W-2 Filing Information, then answer these questions.http://www.ssa.gov/employer/ 1. What are dates that employers must send W-2 information to the Social Security Administration? (Include the dates for both electronic and paper filing.) 2. When must employers give employees their W-2? 3. What two forms do employers send to the Social Security Administration? 15-13

14. Assessment Rubric, p. 645 DateTransaction Navigation Center/Module Task Window Journal Dr./Cr. 1/7Issue payroll Check No. 6050 to Rick Cramer for 40 regular hours. 15-14

15. Analysis Question, page 645 What is the purpose of the TAXTABLE.DAT file? How do you check that the company includes the payroll formulas? 15-15